A critique of an argument never made

Jul 19, 2026 Features / Columnists, Peeping Tom

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(Kaieteur News) – Terence Yhip is perfectly entitled to disagree with my understanding of the Resource Curse. Serious questions of political economy have never advanced through unanimity. What he is not entitled to do, however, is attribute arguments to me that I never made and then proceed to demolish those inventions. Critiquing an argument is fair game. Mischaracterising it is not.

Mr. Yhip’s letter is built almost entirely upon a false premise. He accuses me of attempting to “isolate economics from governance” and of suggesting that “economic policies can succeed in an institutional vacuum.”

Yet nowhere in my article did I make either claim. In fact, I stated explicitly that “transparency and oversight are essential.” I also wrote that the true test is whether national institutions are capable of ensuring that resource wealth serves national development rather than narrow interests. Those are hardly the words of someone dismissing institutions.

My argument was not that economics and governance exist in separate universes. It was that the chronology matters. The Resource Curse begins as an economic challenge before it manifests as an institutional and political one. That distinction is not semantic; it lies at the heart of development economics.

My argument was straightforward. The Resource Curse originates as an economic phenomenon before it becomes an institutional and political one. That is not the same as saying institutions do not matter. It is saying that the initial shock is economic.

The first problem confronting a resource-rich country is the arrival of extraordinary revenues that can distort exchange rates, crowd out productive sectors, create fiscal dependence on commodity exports, and reduce incentives for diversification. Those are economic phenomena. Politics then determines whether those pressures are managed well or disastrously. Institutions influence the outcome, but they are responding to an economic shock that already exists.

Mr. Yhip repeatedly insists that economics and governance are inseparable. There is little disagreement there. The issue is not whether they interact or intersect. The issue is which comes first in the causal chain. His response never seriously engages that question because it substitutes a caricature for the actual argument.

He also claims that Norway’s success was “entirely built on strong, democratic institutions that predated its oil boom.” No one disputes that Norway possessed enviable institutions before discovering oil. Indeed, my article acknowledged precisely that point. But Norway’s success cannot be explained solely by institutional inheritance. Institutions alone do not create sovereign wealth funds, maintain fiscal discipline, invest in technological capability, or deliberately prevent resource revenues from overwhelming the domestic economy. Those were conscious economic policy choices. Strong institutions facilitated those decisions, but they did not make them inevitable.

Conversely, countries with democratic institutions have also mishandled resource wealth. Institutions are necessary, but they are not sufficient. Economic management still matters.

Mr. Yhip further assures readers that “the development literature is full of examples” where weak institutions produced corruption and stagnation. That is undoubtedly true. Yet citing one body of literature while ignoring another proves very little.

The same development literature is equally replete with examples demonstrating that countries have achieved extraordinary economic transformation under governments that would hardly qualify as paragons of liberal democracy. Chile’s rapid economic modernisation under Augusto Pinochet remains one of the most debated examples in modern political economy. The East Asian Tigers likewise remind us that the relationship between political institutions and economic development is considerably more complicated than simple democratic orthodoxy allows. South Korea, Taiwan and Singapore all experienced long periods during which strong state direction preceded the maturation of many democratic institutions.

None of this constitutes an endorsement of authoritarian government. It merely illustrates that economic development and institutional evolution do not often appear in the neat sequence that some appear to assume.

Development economists have long argued that institutions themselves evolve alongside economic development. Countries rarely begin with the sophisticated regulatory agencies, professional bureaucracies and oversight mechanisms associated with advanced industrial economies. Those capabilities are themselves products of development. Wealth helps build institutions just as institutions help create wealth.

Ironically, Mr. Yhip ends his letter by warning against pretending that economic policies can succeed in an institutional vacuum. Yet the only person invoking a vacuum is Mr. Yhip himself. I never argued for one. He manufactured that position because it is easier to refute than the argument I actually presented.

Reasonable people may disagree about whether the Resource Curse is primarily an economic phenomenon, an institutional phenomenon or an inseparable combination of both. That debate is worthwhile. What is not worthwhile is constructing straw men and then congratulating oneself for knocking them down.

The debate over Guyana’s future deserves better. It deserves careful reading, accurate representation of opposing views, and intellectual honesty. If we are to discuss one of the most consequential economic transformations in our nation’s history, we should begin by arguing against what has actually been written—not against arguments that exist only in the imagination of the critic.

The views expressed in this article are those of the author and do not necessarily reflect the opinions of this newspaper

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• argument, Critiquing, Peeping Tom, Terence Yhip

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